FINTRAC (FINTRAC)
Canada’s financial intelligence unit and anti-money-laundering supervisor. Money services businesses must register with FINTRAC before operating in Canada, report prescribed transactions to it and are examined by it — but FINTRAC issues no license and grants no permission to move money.
Also called: Financial Transactions and Reports Analysis Centre of Canada
FINTRAC does two jobs usually split between separate institutions. It is Canada’s financial intelligence unit, receiving suspicious transaction reports, large cash and large virtual currency reports and electronic funds transfer reports, and analyzing them for disclosure to police and intelligence agencies. It is also the anti-money-laundering supervisor for reporting entities, which means it holds the register, sets compliance expectations, examines firms and imposes administrative monetary penalties.
Registration is not licensing
A money services business operating in Canada, or directing services at people in Canada from abroad, must be registered with FINTRAC before it starts. That registration is a filing. FINTRAC checks it for completeness and can refuse or revoke it where a listed ineligibility applies, but it is not an assessment of the business model, the capital behind it or the quality of the people running it. Nobody at FINTRAC approves the plan, and a registration number is evidence of a filing and nothing more.
A second consequence follows. Because no one vets the business at the door, the scrutiny arrives later, at the bank. Canadian banks have taken their own view of money services business risk for years, and a FINTRAC registration number does not by itself get an account opened.
The second Canadian registration
Payment service providers performing retail payment activities register separately with the Bank of Canada under the Retail Payment Activities Act. The two regimes catch overlapping populations for different reasons — FINTRAC for anti-money-laundering supervision, the Bank of Canada for operational risk and the safeguarding of end-user funds. Being on one register says nothing about the other.
In practice
FINTRAC supervises and receives reports; it does not license anyone, and a FINTRAC registration confers no authority a bank or counterparty is obliged to accept. It is also separate from registration with the Bank of Canada under the Retail Payment Activities Act, and holding one does not satisfy the other.
Example
A UK remittance firm sells online transfers to customers in Ontario and has no Canadian office. It is a foreign money services business, and it must register with FINTRAC before taking a single Canadian customer. Registration takes a form and a wait. Getting a Canadian bank account afterwards takes far longer, and the registration is the start of that conversation rather than the end of it.
Commonly confused with
| Term | How it differs |
|---|---|
| Retail Payment Activities Act | The RPAA registers payment service providers with the Bank of Canada for operational risk and fund safeguarding, while FINTRAC registers money services businesses for anti-money-laundering supervision. |
| FinCEN | FinCEN is the closest US counterpart — a financial intelligence unit that registers rather than licenses — but the two operate under different statutes and a registration with one means nothing to the other. |
See also
- Retail Payment Activities ActThe Retail Payment Activities Act is Canada’s framework requiring payment service providers to register with the Bank of Canada and meet operational risk and end-user fund requirements. RPAA registration is separate from, and additional to, FINTRAC registration as a money services business.
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.
- Foreign Money Services BusinessA foreign MSB is a money services business located outside the United States that does business wholly or in substantial part within the United States, and must therefore register with FinCEN. Canada uses the same term for a separate status of its own.
- FinCENThe bureau of the US Treasury that administers the Bank Secrecy Act. FinCEN writes the anti-money-laundering rules applying to financial institutions, receives suspicious activity and currency transaction reports, and maintains the federal register of money services businesses.